A plan for tax rate linked to CEO pay

For many years now, the Rhode Island economy has lagged behind much of the nation’s and the high cost of doing business here scares many companies away from locating here.

The current corporate tax rate for Rhode Island is 9 percent. My proposal would be to offer a tax rate of 6 percent to those businesses that tie executive pay to average worker’s pay. Any company where CEO pay/compensation doesn’t exceed 20 times the average worker’s pay would qualify for the lower tax rate. If the company is unionized, the union leadership would not be allowed to receive more than 2.5 times what the average worker makes. If those conditions are met, then the company receives the lower corporate tax rate.

This would provide incentive for companies located in this state to share the wealth with their workforce. It would attract more of the talented workers to this state. Innovative, new companies would locate their operations here to take advantage of the reduced corporate taxes. Workers would have more disposable income to purchase items in local stores.

I truly believe this just could be a win-win situation for the businesses and workers of this state and I hope our elected officials would give serious consideration to this idea.

Comments

It would be a failed policy. Ben and Jerry's had a rule that no employee could earn X amount of dollars more than the lowest paid employee (I think it was 7x). They were forced to abandon that policy when they grew to big to serve as CEO and they had to bring in a professional manager.

But if a companies average employee earns $50,000 that means the CEO would earn $1,000,000. Sorry, that seems like a lot of money but for managers that are in demand it isn't much. Rhode Island wouldn't be able to attract any talent and more money and more jobs would leave.

Mr. Midura- Thank you for capturing the reason why major US corporations avoid RI like the plague. The notion that state government should have a role, any role, in dictating private sector compensation accurately summarizes the odd, class envy nature of too many RI citizens.